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The below content is purely for informational purposes and is not intended to constitute advisory of any kind. Please note, these are in-depth articles which are best viewed on large screen devices like laptops, desktops and tablets. The position reflected in this article has been updated as of January 15, 2024.

As a Non-Resident Indian (NRI), you may want to transfer money back home to your family, continue with your investments, or meet banking needs in India. Indian banks offer you a variety of NRI bank accounts to choose from as per your financial requirements. To open these accounts, you must be an NRI/Person of Indian Origin (PIO)/Overseas Citizen of India (OCI) as per the prevailing Foreign Exchange Management Act (FEMA) regulations.

  • Non-Resident External (NRE), Non-Resident Ordinary (NRO) and Foreign Currency Non-Resident Bank (FCNR (B)) are three types of bank accounts/deposits offered to NRIs. 

  • These accounts facilitate seamless transfer or accessibility of funds within India and overseas.

In this article, you can learn more about the features, eligibility and critical differences between NRE, NRO, and FCNR (B) accounts to determine which ones best suit your financial requirements.

Open an NRI account

 

Outlining NRE, NRO and FCNR (B) bank accounts

NRE account: It is a type of bank account that you can open in India as an NRI. It is maintained in Indian Rupee (₹). You can use it to deposit funds you earn abroad. The bank uses the prevailing exchange rates to convert your foreign currency funds into Indian Rupees and deposits them into your account. The account suits those who want to use their foreign earnings to handle expenses in India. A key benefit of an NRE bank account is that you can freely repatriate, i.e., transfer the funds to your overseas account without any limits. The repatriable funds include both the principal amount and the interest earned in this account. Furthermore, the interest earned on the money deposited in this account is tax-free in India. 

Open an NRE account

 

NRO account: It is yet another bank account that you, as an NRI, can open in India. It is a Rupee-denominated account that you can use to deposit income earned in India, such as rent, dividends, pensions, gifts and proceeds from the sale of immovable property received in India. The account is suitable for NRIs who want to use income earned in India to manage their expenses in the country.

Funds deposited in your NRO bank account can be classified as:

  • Current income: It includes rental income, dividends from investments, pension, interest from Fixed Deposits (FD) and bank accounts, among others. The funds from current income are freely repatriable without any limit.

  • Capital income: It includes proceeds from maturity of FD, sale of property, redemption of mutual funds, shares and fund transfers from your NRO account to your NRE account. The interest earned in an NRO account is taxable in India. You can repatriate capital funds up to USD 1 million cumulatively per Financial Year (April–March) for all your NRO accounts held in India. Fund transfers from your NRO account to your NRE account also fall under the USD 1 million limit.

Open an NRO Account

FCNR (B) account: It lets you maintain a fixed deposit in India in foreign currency. Like an NRE bank account, the funds in this account and the interest earned are tax-free in India and are freely repatriable with no limits.

 

OPEN AN FCNR (B) ACCOUNT

 
Did you know?

Upon getting the NRI status, a resident savings account must be either closed or converted only to an NRO account. It typically cannot be converted to an NRE account.

Account features and permissible transactions for NRE/NRO/FCNR (B) accounts

Please note, tables are best viewed on desktops or in landscape mode on mobile phones.

Account Features NRO NRE FCNR (B)

Account maintained in

Indian currency

Indian currency

Foreign currency

Deposit currency

Indian rupee 

Indian rupee 

Any permitted Foreign currency

Withdrawal currency

Indian currency

Indian currency

Foreign currency

Interest earned in the account

Taxable in India 

Tax-free in India

Tax-free in India

Type of accounts

  • Savings

  • Current

  • Recurring

  • Fixed Deposit

  • Savings

  • Current

  • Recurring

  • Fixed Deposit

  • Fixed Deposit

Joint holding

 

Can be held with two or more NRIs/PIOs.

And

Can be held on a ‘former or survivor’* basis with a resident.

Can be held with two or more NRIs/PIOs.

And

Can be held on a ‘former or survivor’*,  basis with a resident relative**

Can be held with two or more NRIs/PIOs.

And

Can be held on a ‘former or survivor’*,  basis with a resident relative**

Power of Attorney (PoA)***

Permitted

Permitted

Permitted

Permitted payments and transfers

  • Local payments

  • Transfers to other NRO accounts

  • Outward remittance of current income without limit.

  • Outward remittance of capital funds (up to USD 1 million per Financial Year).

  • Local payments

  • Outward remittances

  • Transfer to other NRE/ FCNR (B) accounts and investments in India.

  • Local payments

  • Outward remittances

  • Transfer to other NRE/ FCNR (B) accounts and investments in India.

Repatriation

  • For current income, freely repatriable without limit.

  • For capital funds, permitted up to USD 1 million per Financial Year.

  • The above repatriation is subject to necessary tax compliances and documentation such as Form 15 CA.

Freely repatriable

Freely repatriable

*The term ‘former’ or ‘survivor’ basis refers to the condition where only one of the two joint account holders, that is the former account holder can primarily operate the account. The ‘Survivor’ can only operate the account after the ‘Former’ passes away.

**Relative is defined under section 2 (77) of the Companies Act, 2013. This includes their parents (including stepparents), son (including stepson), son’s wife, daughter, daughter’s husband, siblings (including stepsiblings), and children.

***Reserve Bank of India: Master Directions- Deposits and Accounts

Conclusion

NRE, NRO and FCNR (B) bank accounts serve specific purposes and offer different advantages. An NRI should choose which bank accounts to maintain basis their requirements.

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Frequently Asked Questions

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Can an NRI maintain all three NRE, NRO and FCNR (B) accounts simultaneously?

Yes, you can maintain all three accounts simultaneously. You can use a combination of these accounts to manage your banking, depending on the income sources and financial needs.

Can a resident Indian be a joint holder?

Yes, any resident Indian can be a joint holder in an NRO account. However, only a resident relative can be a joint holder in the NRE/FCNR (B) account. 

For detailed information on joint accounts for NRIs, click here.

Can an NRE/NRO account be opened online?  

Yes, you can open both an NRE and NRO account online (in case the channel is available with your bank). Click here to open an ICICI Bank NRE or NRO account.

What happens to NRE/NRO/FCNR (B) accounts when an NRI returns to India?

Once you relocate to India, you must contact your bank to convert your NRI accounts to a resident account.

However, you can hold FCNR (B) accounts until maturity. Alternatively, you can choose to convert your FCNR (B) deposit into a Resident Foreign Currency (RFC) Deposit Account. This will enable you to continue maintaining foreign currency holdings.

You must also provide the bank with proof of your resident Indian status and submit the necessary documentation.

Ravi gets an overseas assignment from his company. Before he leaves, can he transfer money from his existing investments like FD and mutual funds abroad?

Before getting the NRI status, Ravi can dilute his investments and can take USD 250,000 under the prevailing Liberalised Remittance Scheme (LRS) norms. As per the RBI regulations, after getting the NRI status, Ravi will have to re-designate his resident savings and deposit accounts to an NRO account. He will have to provide KYC documents as applicable

Sanya is being sent abroad for a multi-year corporate project. What will happen to her existing investments, like FD and mutual funds?

As per the RBI regulations, Sanya will have to convert her existing resident savings and deposit accounts to an NRO account. For her mutual fund holdings, she will have to update her status to a non-resident with the respective Asset Management Company (AMC). This will be considered as an non-repatriable investment. The income earned in India, such as interest on FD and dividends on mutual funds, is treated as current income and is permitted to be credited to an NRO account. Sanya can freely repatriate her current income (as defined above) if she wants to. Balances in her NRO account will be considered as capital income and can only be repatriated up to USD 1 million cumulatively per Financial Year for all NRO accounts she holds in India (subject to prevailing FEMA regulations).

What are the currency options on the FCNR (B) account?

As per the prevailing FEMA regulations, banks are allowed to accept FCNR (B) deposits in any currency which is freely convertible. However, the commonly used foreign currencies to open an FCNR (B) account are the US Dollar, Euro, British Pound, Australian Dollar, Canadian Dollar and Japanese Yen. Please consult with your bank's relationship manager to know about the permissible currencies for opening an FCNR (B) deposit account with your bank.

Can I transfer funds from my FCNR (B) to an NRE or NRO account? 

Funds available in FCNR (B) are freely repatriable. Transfer of funds from FCNR (B) to an NRE account or vice versa is allowed. 

Can I transfer funds from my NRO account to an NRE?

NRO to NRE transfer: Rental income, Income/dividend from investments, pension, interest from fixed deposits (FD) and bank accounts, among others deposited in an NRO account classify as current income which can be transferred to an NRE account without any limit. Other balances in an NRO account can be repatriated (transferred) to an NRE account or abroad upto USD 1 million per Financial Year (April–March), this would be subject to source of fund.

 

You may consult with your bank for the requirement of Form 15 CA/CB at the time of transfer of funds from the NRO to the NRE account.

Can I appoint a resident Indian as a mandate holder to operate my accounts and make investments on my behalf?

Yes, you may appoint a resident Indian as a mandate holder to operate your bank account as per permitted operations/transactions on behalf of the account holder(s)

Know more on how to appoint a mandate holder for NRIs. 

Are NRE, NRO, and FCNR (B) accounts insured by the Deposit Insurance and Credit Guarantee Corporation (DIGC)?

NRE, NRO, and FCNR (B) accounts are insured by the DICGC up to a maximum of ₹5 lakh per depositor per bank.

View More

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NRO accounts: Explained

Disclaimer:

The contents of this article/infographic are meant solely for informational purposes. The contents are generic in nature and are not intended to serve as a substitute for specific advice on any matter whatsoever. The information is subject to updation, completion and verification and the applicable norms may keep changing materially from time to time. This information is also not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to applicable laws or would subject ICICI Bank Limited/its affiliates to any licensing or registration requirements. ICICI Bank Limited/its affiliates and their representatives shall not be liable for any direct or indirect losses or liability incurred arising in connection with any decision taken by any person on the basis of this content. Please conduct your own due diligence and consult your financial advisor before making any decision. Terms and conditions of ICICI Bank and third parties apply. ICICI Bank is not responsible for third party services. Nothing contained herein shall constitute or be deemed to constitute an advice, invitation or solicitation to avail any products/ services of third parties.

 

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